Zoe's utility function for brownies (X) and pizza (Y) is given by U(X,Y)= 8XY. Her monthly income is $200, the price of a brownie is $2, and the price of a pizza is $10. a) How many brownies and pizzas will Zoe purchase this month to optimize her utility? b) What is Zoe's utility at her optimal consumption bundle? c) Will Zoe's demand for pizza increase, decrease, or stay the same if her income increases while relative prices stay the same?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Question

economics

Zoe's utility function for brownies (X) and pizza (Y) is given by U(X,Y)= 8XY. Her monthly income is $200, the
price of a brownie is $2, and the price of a pizza is $10.
a) How many brownies and pizzas will Zoe purchase this month to optimize her utility?
b) What is Zoe's utility at her optimal consumption bundle?
c) Will Zoe's demand for pizza increase, decrease, or stay the same if her income increases while relative prices
stay the same?
Transcribed Image Text:Zoe's utility function for brownies (X) and pizza (Y) is given by U(X,Y)= 8XY. Her monthly income is $200, the price of a brownie is $2, and the price of a pizza is $10. a) How many brownies and pizzas will Zoe purchase this month to optimize her utility? b) What is Zoe's utility at her optimal consumption bundle? c) Will Zoe's demand for pizza increase, decrease, or stay the same if her income increases while relative prices stay the same?
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